Robert A. Marcino, Esq. from PLAN DOC Builder® © 2011, National Association of Health Underwriters SPD Compliance & Requirements: Mystery Solved 2012 NAHU Annual Convention

© 2011, National Association of Health Underwriters

TODAY’s AGENDA The 3 Majors: ERISA, HIPAA & PPACA SPDs and ERISA compliance The Challenges Compliance: Who is Responsible? Plan Document & SPD Provisions (and SBC’s) DOL Audits and Non-Compliance Consequences What’s Coming and How Will SPDs Be Affected? Summary

© 2011, National Association of Health Underwriters The 3 Majors: What dictates Compliance? ERISA (1974) –Title I governs structure of employee benefit plans, including Reporting & Disclosure requirements –DOL and IRS regulations, bulletins and other issuances provide guidance Health: Medical | EAP | Dental | Health Care FSA | Vision | HRA Disability & Life/AD&D HIPAA (1996) –Portability, non discrimination, privacy & security mandates –Pre-existing Limits/Creditable Coverage PPACA (2010) –Series of requirements / Grandfathered provisions –No lifetime limits, No rescissions –Pre-existing Conditions eliminated for all 1/1/2014 –Dependent children covered until age 26 –SBC and IRO for Denied Claims

© 2011, National Association of Health Underwriters SPDs and ERISA Compliance ERISA (1974) Title I –Requirements for all employee benefit plans. MUST: Administer the Plan according to the written Plan document Provide detailed disclosure – SPDs & SMMs Perform certain reporting (i.e. Form 5500) when over 100 ee’s Comply with Fiduciary code of conduct Advantages of ERISA Compliance –Better outcomes in DOL audits & Law Suit avoidance –Federal law limits damages, no jury trials –Higher standard of review: “arbitrary and capricious” for overturning decisions of a Plan Administrator –May Preclude employer from being sued in state court (or several state courts) and “de novo” review

© 2011, National Association of Health Underwriters SPDs and ERISA Compliance The Plan Document –Legal written document required by ERISA The SPD (Summary Plan Description) –Required “summary” of the PD to be understood by the average participant –What the Plan provides and how it operates –Employee Rights and Obligations –Must be provided to participants SMM (Summary of Material Modification) –Summary to update the SPD describing amendments made –Must be provided to participants Current Means of Production: Varies

© 2011, National Association of Health Underwriters The Challenges Self Funded Plans –Maintaining Compliance Amendments and SMMs required for changes: –Regulatory Updates and/or Benefit design –No “Insurance” certificates describing benefits –Responsibility of Plan Sponsor (Employer) Fully Insured Plans –Most Employers unaware of compliance requirements –Carriers are not responsible for more than the COC –COC’s are not SPDs and lack required SPD provisions –Again, Responsibility of Plan Sponsor (Employer)

© 2011, National Association of Health Underwriters Compliance Who Must Comply? – Common misunderstanding of exceptions to compliance that leads many employers to be non-compliant – Easier to look at who is exempt and from what

© 2011, National Association of Health Underwriters Compliance ERISA (1974) Title I –Which plans are exempt from what? Government and church plans exempt from Title I of ERISA –No requirement to comply with Reporting or Recordkeeping –But must have a Plan Document/SPD. Some of these plans voluntarily choose to follow SPD content rules. Private Sector Employer Sponsored Plans –Plans Exempt from Disclosure and Reporting »Employer-Provided Day Care Centers (except onsite) »Key employee plans (have to be insured) »Certain fringe benefits (e.g., tuition reimbursement) *All defined in CFR2520 (regs of ERISA)

© 2011, National Association of Health Underwriters Compliance ERISA (1974) Title I Private Sector Employer Sponsored Plans (continued) –Exempt from 5500 Reporting only »Small Plans - fully insured welfare plans with fewer than 100 participants at the beginning of the plan year. Few other exceptions do exist (i.e., foreign based locations) - Other Exceptions »If funded through a VEBA (i.e., trust), additional reporting (Form 990), financial audit and document issues exist »If MEWA (Multiple Employer Welfare Association), unrelated employers, then additional reporting (Form M-1) and document issues exist. »Virtually all ERISA plans & fiduciaries have recordkeeping requirements (especially grandfathered plans)

© 2011, National Association of Health Underwriters Compliance Bottom Line ALL Health and Welfare plans, regardless of size, must have a Plan Document / SPD Those under 100 included in the requirement except that they likely do not need to file a form 5500

© 2011, National Association of Health Underwriters Plan Document & SPD Provisions Key Plan Document Provisions 1. Named Fiduciary/Plan Administrator 2.Procedure for Allocation of Responsibilities 3.Overview of Benefits Provided (i.e. We offer benefits…) 4.Employee Eligibility 5.Source and method of funding 6.How Payments Are Made 7.How Benefits may be Lost or Reduced 8.Amendment Procedure 9.Distribution of Assets on Plan Termination (if through Trust) 10.Adoption Page (can be done by board action as well)

© 2011, National Association of Health Underwriters Plan Documents & SPD Provisions Key SPD Provisions 1.Plan-Identifying Information 2.Description of Plan Eligibility Provisions 3.Actual Description of Plan Benefits 4.Description of Circumstances Causing Loss or Denial of Plan Benefits 5.Description of Plan Amendment and Termination Provisions, Plan Subrogation or Reimbursement Provisions 6.Information Regarding Plan Contributions and Funding 7.Information Regarding Claims Procedures a. Disclosures Required in the SPD b. Disclosures Regarding Discretionary Authority 8.Statement of ERISA Rights a. Model Language Should Be Tailored to Plan 9.Offer of Assistance in Non-English Language 10. Plan's Policy Regarding Recovery of Overpaid Benefits 11. Plan's Allocation Policy for Insurer Refunds / Rebates

© 2011, National Association of Health Underwriters Plan Document & SPD Provisions Carrier Documents for Fully Insured –Certificates of Coverage, Benefit Booklets ERISA content not required Governed by State Insurance Laws, not ERISA Some are more inclusive than others Typically lack: –Required eligibility provisions –Contribution method –ERISA Appeal Rights –Updated compliance language –Claim Procedures and Levels of appeals

© 2011, National Association of Health Underwriters Plan Document & SPD Provisions SBCs (Summary of Benefits and Coverage) –Provides high level comparison of each medical option –Format must follow specified layout and verbiage –Must be distributed during open enrollment or to new employees –Allows easy comparison of plans to determine costs for 2 medical conditions – birth of child and diabetes –Insurers generally create for insured benefits –For self-funded, employer is responsible –New notice (in April of this year) indicates little changes for 2013

© 2011, National Association of Health Underwriters Where do you go from here? What is the Required Format? ERISA does not dictate a required format of Plan Documents or SPDs –Considerations are always Client Specific Identify benefit types and existing plan documents, if any. –Wrap-Around Plan creates a single or combined plan for all insured benefits, incorporating the COC as part of the SPD. Can also create a wrap-around plan for insured benefits only and a separate bundled plan for self-funded benefits with separate or combined SPDs –Individual Plan with separate PD and separate SPD for each benefit –Umbrella Plan combines all welfare benefits into a single plan with separate bundled or individual SPDs –Combined Plan/SPD document creates a combined Plan and SPD for a specific benefit or for all welfare benefits Advantages of combining plans –Creates a single Plan Year for all benefits and for Form 5500 filing purposes »Ties benefit Plan Year to employer tax year »One 5500

© 2011, National Association of Health Underwriters How PLAN DOC Builder® Can Help –ERISA-Compliant and User-Friendly –Combined Plan/SPD for single or multiple benefits –Fully Insured and Self Funded –Wrap Doc for fully insured benefits –Includes Regulatory updates –Ability to create SBCs & Benefit Amendments –Included Technical & Consultative Support –Unlimited Users & Discounts for NAHU Members

© 2011, National Association of Health Underwriters

DOL Audits & non-Compliance Consequences

© 2011, National Association of Health Underwriters DOL Audits & Non-Compliance Consequences –Law suits under ERISA enforcing ERISA's document requirement, including requiring one where none exists –$110 / day if failure to provide SPD within 30 days –DOL Audits & Fines (especially re: Grandfathered Status) –Plan Disqualification leads to loss of Tax Deduction –Participants and beneficiaries who sue to enforce informal, unwritten plans can base their legal claims on past practice –Less favorable “de novo” standard when No SPD

© 2011, National Association of Health Underwriters What is Coming? –NO coverage denials due to pre-existing conditions and NO higher charges based on gender or health condition. –No annual dollar limit on Essential Health Benefits and must be part of all health insurance plans. –Group health plans cannot impose a waiting period for coverage greater than 90 days. –DOL has delayed the release of model language for the Notice of Exchanges.

© 2011, National Association of Health Underwriters Conclusion PPACA is here to stay. DOL has significantly increased staff and budget to conduct compliance audits. Plans should make every attempt to comply with ERISA MUST: Have Plan Document / SPD MUST: Disclose, Distribute and Keep Records MUST: File annual report (form 5500) if over 100 employees